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One of the rules of thumb in marketing is that newcomers to a market should be innovators, while successful incumbents should incrementally improve on their formula for success. But what to do when you are in a market that is established, some might even say old fashioned – and at the same time undergoing transformative change?

The art market fits that description: on the one hand, most fine art is still sold through bricks-and-mortar galleries. On the other hand, gallery foot traffic and shows have been declining, while myriad art fairs have sprung up over the past decade, turning place-bound entrepreneurial businesses into businesses with global reach.

Earlier today, I spoke with Cornell DeWitt, Director of Pulse Contemporary Art Fairs, about the transformative change in the art business, its impact on galleries, collectors and artists, and an increasingly crowded art fair market. By most standards, Pulse, founded in 2005, is a young business. In its field, however, it is an established player, focused on leveraging this status into a competitive advantage.

Marc E. Babej: Pulse is a satellite art fair. How would you describe satellite art fairs to an outsider, and how does Pulse stand out?

Cornell DeWitt: Satellite fairs are smaller fairs that take place in the same cities and at the same time as larger fairs. Traditionally, satellite fairs were in smaller venues, often hotels, and focused on younger artists and galleries. Pulse was founded in 2005, to take place in conjunction with the Armory Show in New York and Art Basel Miami. But from the get-go, Pulse was designed to be more professional, less scrappy – to be a home for both emerging and mid-range galleries, mid-career artists. This mid-market positioning still sets us apart. Other fairs try to imitate this positioning, but Pulse is best known for it.

We’ve created an experience that is a known quantity: people know what to expect from us, and associate us with it. There is a core group of galleries that go to Pulse. Each year we have only a 10-20% turnover of galleries, so there’s a good number of familiar faces and new blood. Particularly given the competition from new fairs, we’re something of a stalwart – and we’re proud of that.

MEB: The art fair business has exploded over the past years. How do you account for the growth of the category?

: To understand what fairs have become, it’s important to recognize the impact of the Internet on the art business. With the Internet, a collector in L.A. was suddenly able to look at the work of an artist in Brooklyn showing at a gallery in London. But ultimately, collectors shouldn’t – and most don’t want to – buy a work of art without physically seeing it.

When the Internet exploded and promised international reach, there was a greater perceived need for the key parties (dealers, collectors and works of art) to be in one place together. It’s a business about facilitating relationships: between dealers and collectors, and between collectors and works of art. Then, in the early 2000s, the art fair business gained a momentum of its own.

MEB: … leading to an explosion in the number of art fairs, especially satellite fairs…

CDW: Precisely. Nobody would argue that there aren’t too many fairs, nowadays. From collectors, to galleries, to artists – everyone is overstretched. This has had a far-reaching impact on the quality of the visitors, the art on display, and ultimately the visitor and gallery experience. An art fair makes money when it sells out booths, but galleries only make money if they sell artwork.

A lot of people have jumped into the art fair game and increasingly, they realize that it’s harder than it looks. That’s where our experience is a huge asset. We have great and established relationships with our vendors and venues, and we always hear from galleries that our fairs are the best organized and smoothest of the many they attend. Also, when a collector goes to Miami and has 3 days to go to 23 fairs, they know that Pulse is an established choice. That experience and reputation then benefits galleries, artists, and visitors.

MEB: Are you expecting a shakeout in the art fair business?

CDW: Five years ago anyone would have said: “this can’t go on.” But it keeps growing. Miami in particular seems to defy reason as to what’s sustainable there. Collectors know which shows are priority. This is what’s keeping Miami, New York, London or Basel aloft. For satellite fairs, this means: the more crowded the field, the more a reputation as an established player becomes as a competitive asset.

MEB: There’s been a lot of talk in the industry that the traditional gallery show is dying. Do you agree?

CDW: Most mid-size galleries will say that their foot traffic has been falling. But there are two sides to the coin: on the one hand, a gallery in, say, Culver City (L.A.) may not be selling as much out of their physical location as they used to. But while they might have lost foot traffic in their own market, they can now gain much broader foot traffic – they now might have clients in Europe and Asia.